Author Topic: Renters for life/foreseeable future - worried about renting in old age?  (Read 9014 times)

aGracefulStomp

  • 5 O'Clock Shadow
  • *
  • Posts: 45
  • Location: Australia
Hey there everyone,

I live in Australia in a city where housing prices are insane (2nd most expensive city in the world actually). While I'd love this housing bubble boom to end, there's a chance it could continue forever or alternatively fail to crash fall to an extent at which prices become reasonable.

I've done the calculations on the capital needed to own a house, and the capital needed to forever pay rent (based on a 4% rule). The difference between the two amounts are ridiculous - pursuing ownership would require me to work many extra years.

However I can't imagine being like 60, 65, 70, 80 and having to move house every few years because my lease has ended and the landlord wants new tenants (or is moving into the house, selling, etc).

So is anyone a bit older and renting? Do you regret not buying and/or do you plan to buy in the future? Are you concerned about having to move again and again forever, particularly if you reach an age with decreased mobility?

Or those that have chosen the "renting life" and are a big younger, have you considered these issues?



Libertea

  • Bristles
  • ***
  • Posts: 363
  • Age: 42
  • Location: USA
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #1 on: January 24, 2017, 12:58:04 PM »
I am currently age 41 and a lifelong renter.  I have no imminent plans to buy, but I have thought about the same issues as you have, and my thought is that I will buy eventually....once I figure out where I want to end up.  Or possibly during the next market crash (unfortunately I didn't have the money to buy back in 2008-2009).  In the meantime, I'm renting and continuing to save money with the thought that once I do buy, I will likely just pay cash and not bother going through the hassles of having a mortgage.

Eric

  • Magnum Stache
  • ******
  • Posts: 3623
  • Location: On my bike
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #2 on: January 24, 2017, 01:30:09 PM »
Do they not have movers in Austraila?  With all the money you've saved from not owning, surely you can afford to pay someone to move your stuff if needed.

But I also think the "having to move" concern is way overblown.  There's basically nothing a landlord wants more than a tenant who is stable, pays their rent on time, and isn't throwing large parties or disturbing the whole neighborhood.  Elderly people with money are basically the perfect tenants.  Find a place owned by a person, not some rental complex, and you'll probably never have to leave unless you choose to do so.
"Compound interest is the most powerful force in the universe."  -- Einstein

aGracefulStomp

  • 5 O'Clock Shadow
  • *
  • Posts: 45
  • Location: Australia
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #3 on: January 24, 2017, 02:28:19 PM »
Do they not have movers in Austraila?  With all the money you've saved from not owning, surely you can afford to pay someone to move your stuff if needed.

I guess my concerns are shaped by my social work experiences with older persons.

Moving isn't just about moving your things on the day that your lease ends. It involves house searching, which may be a lot harder if you require a place that accommodates physical disability (like a wheelchair, or somewhere with no stairs, disability aids like handlebars, assistance buttons). It requires you to not only find these places but apply for them, competing against other candidates (which, with an aging population, will probably be quite a few).

You may not be able to secure an appropriate living location in the same area. Particularly with decreased mobility, moving can have devastating social and psychological impacts for older persons. This includes intense loneliness and isolation, loss of confidence etc

This will be compounded, as I expect to happen with increasing age, by the reality that people are far less adventuress when they are older  - just like I enjoy routine and consistency much more at 26 than I did at 18. By the time I get to 65, I doubt I'm going to relish such a substantial change.

Effectively moving can be incredibly hard on older people, issues which stretch beyond the logistical issues. In fact it often results in the person moving into assisted care (aka nursing home) far sooner than they should be).

And Eric you're right, perhaps older renters are less likely to be asked to leave. But it does happen in Australia - enough for it not to be uncommon! Which is probably a reflection of the Australian propert investing culture - most Australians buy property to profit from the capital gains, not the cashflow. So selling investment property is pretty common (or buying it with intention to move into it when the mortgage is more manageable under the nationally strong held belief that Australian property never goes down)



Jakejake

  • Pencil Stache
  • ****
  • Posts: 706
  • FIRE: June 17, 2016
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #4 on: January 24, 2017, 02:42:44 PM »
I'm not a renter, nor are my parents. But if you are looking for a silver lining of aging and renting, this is what I've seen in my family - and my inlaws as well. The people who have been in one house for decades have a tendency to accumulate insane amounts of stuff.

I've been guilty of this myself, but in my defense at least decluttering/minimizing is my goal this winter and I'm kicking butt there. I have several family members though who are teetering on or past the edge of being legitimate hoarders, and some have had accidents in the home because of tripping over their piles of stuff. If you are forced to move on a regular basis, much of the crap gets reevaluated and weeded out at each move, and I think while the moves are distressing, the living environment once you are settled in can be more relaxing because of the cleanliness and order.

Also, for a few of my aging relatives, they are at the point where their house is more than they can really manage - in terms of daily maintenance and cleaning. Their problems range from no longer being able to copy with stairs safely, to not calling for plumbers because their house is too messy to let someone upstairs - and as a result just "abandoning" a nonworking toilet on the second floor for years, to simple things like having a dead clock above the kitchen sink because they can't climb a step ladder to change the battery.

But they are all so comfortable in their homes and resistant to change after decades of living there that they won't move to a safer place now, and the thought of packing everything that's been there for decades becomes too overwhelming to contemplate.

Retire-Canada

  • Magnum Stache
  • ******
  • Posts: 4589
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #5 on: January 24, 2017, 07:49:53 PM »
I live in Australia in a city where housing prices are insane (2nd most expensive city in the world actually). While I'd love this housing bubble boom to end, there's a chance it could continue forever or alternatively fail to crash fall to an extent at which prices become reasonable.

Do you have to live there? Can you move somewhere more affordable in FIRE?

I know locally the main reason people can't/don't move to LCOL areas is the need to work/earn money. FIRE eliminates that so many great LCOL areas are feasible.

Paul der Krake

  • Magnum Stache
  • ******
  • Posts: 3520
  • Age: 9
  • Location: WA
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #6 on: January 24, 2017, 07:56:35 PM »
My grandparents are lifelong renters- a fact I only recently learned because they have been in their apartment longer than I have been alive, and were recently told to move by the new owner who inherited the property and wanted it for himself. They are in their 80s and had been in the unit for almost 35 years.

They ended up moving to the adjacent unit, in the same building, on the same floor. The floor plan is the same and the balconies connect. My dad and uncle showed up, moved all their stuff 100 feet to the left, and that was that.

Metric Mouse

  • Walrus Stache
  • *******
  • Posts: 5311
  • FU @ 22. F.I.R.E before 23
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #7 on: January 25, 2017, 01:41:36 AM »
I've done the calculations on the capital needed to own a house, and the capital needed to forever pay rent (based on a 4% rule). The difference between the two amounts are ridiculous - pursuing ownership would require me to work many extra years.

That's so weird. For me to rent my house in my area would be over twice what I pay for mortage payment.
Give me one fine day of plain sailing weather and I can mess up anything.

MustacheMathTM

steveo

  • Handlebar Stache
  • *****
  • Posts: 1470
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #8 on: January 25, 2017, 02:31:07 AM »
I'm Australian and I own my house in Sydney which is I assume the city where you are located. At some point we may want to sell our house and rent because that way we can move around more. My 15 and 13 yo kids just told me at dinner they aren't moving out ever because it's too expensive.

I'm not worried about renting in old age. Most people end up in a retirement village or nursing home anyway. Like someone above said just pay a mover to move your stuff for you.

Houses are crazy expensive in Sydney and the yield is basically non-existent. My FIL owns a couple of houses in some of the most expensive areas in Sydney. The yield when he rents out his properties is something like 3 months rent. So 9 months rent per year pays for his land tax.

Our house is our buffer and why I have no problems retiring on a 5% or possibly even a little higher WR.

aGracefulStomp

  • 5 O'Clock Shadow
  • *
  • Posts: 45
  • Location: Australia
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #9 on: January 25, 2017, 04:19:31 AM »
That's so weird. For me to rent my house in my area would be over twice what I pay for mortage payment.

That makes me so sad haha 😩😩😩😩



Retire-Canada

  • Magnum Stache
  • ******
  • Posts: 4589
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #10 on: January 25, 2017, 06:46:11 AM »
That's so weird. For me to rent my house in my area would be over twice what I pay for mortage payment.

Our mortgage payments are less than rent for the same property. Not half, but it's certainly cheaper to own than rent. **

** - at some point the equity in the house sitting unproductively will mean I could rent cheaper or I can pull out the equity and then staying in the house would be cheaper.

2Birds1Stone

  • Magnum Stache
  • ******
  • Posts: 3039
  • Age: 30
  • Location: New York
  • CFO
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #11 on: January 25, 2017, 06:50:26 AM »
You can always buy something in your old age.
"A small house can hold as much happiness as a big one." - Fortune Cookie

33 Months till FIRE - Stop by, or stay a while.....
https://forum.mrmoneymustache.com/journals/fire-by-thirty-five-chronicles-36-months-till-sabbatical!/

Dicey

  • Walrus Stache
  • *******
  • Posts: 5972
  • Age: 59
  • Location: NorCal
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #12 on: January 26, 2017, 07:21:15 AM »
My grandparents are lifelong renters- a fact I only recently learned because they have been in their apartment longer than I have been alive, and were recently told to move by the new owner who inherited the property and wanted it for himself. They are in their 80s and had been in the unit for almost 35 years.

They ended up moving to the adjacent unit, in the same building, on the same floor. The floor plan is the same and the balconies connect. My dad and uncle showed up, moved all their stuff 100 feet to the left, and that was that.
Hmmm, wonder why the LL didn't just move into the unit next door himself? Why did he have to uproot them?
I did it! I have a journal!
A Lot Like This
And hell yes, I am still moving confidently in the direction of my dreams...

Metric Mouse

  • Walrus Stache
  • *******
  • Posts: 5311
  • FU @ 22. F.I.R.E before 23
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #13 on: January 26, 2017, 07:38:12 AM »
That's so weird. For me to rent my house in my area would be over twice what I pay for mortage payment.

Our mortgage payments are less than rent for the same property. Not half, but it's certainly cheaper to own than rent. **

** - at some point the equity in the house sitting unproductively will mean I could rent cheaper or I can pull out the equity and then staying in the house would be cheaper.

I never thought of that. The opportunity costs of a paid off mortgage could offset much of the cost difference, depending upon market gains.
Give me one fine day of plain sailing weather and I can mess up anything.

MustacheMathTM

RetiredAt63

  • Walrus Stache
  • *******
  • Posts: 6784
  • Location: Eastern Ontario, Canada
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #14 on: January 26, 2017, 08:28:22 AM »
First, for most people these days 65 is not old. 

I am planning to sell my house put my house on the market this spring and become a renter.  I've been a homeowner since 1978.  Houses have benefits and issues, and for me the benefits are becoming less important and the issues more important.  I expect that the equity from my house, invested fairly conservatively, will cover most or all of my rent even though I will be going from a LCOL area to a medium COL. 
The measure of civilization is how people treat one another.

http://forum.mrmoneymustache.com/meetups-and-social-events/ontario's-own-camp-mustache-2017/ - MEET US THERE!

Paul der Krake

  • Magnum Stache
  • ******
  • Posts: 3520
  • Age: 9
  • Location: WA
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #15 on: January 26, 2017, 08:35:49 AM »
My grandparents are lifelong renters- a fact I only recently learned because they have been in their apartment longer than I have been alive, and were recently told to move by the new owner who inherited the property and wanted it for himself. They are in their 80s and had been in the unit for almost 35 years.

They ended up moving to the adjacent unit, in the same building, on the same floor. The floor plan is the same and the balconies connect. My dad and uncle showed up, moved all their stuff 100 feet to the left, and that was that.
Hmmm, wonder why the LL didn't just move into the unit next door himself? Why did he have to uproot them?
The landlord only owns the first unit, not the second. It wouldn't make sense for him to pay someone else to use unit #2 when he can live in unit #1 for free. I should have said condo and not apartment, but in France, where this story is set, there is no word for condo, so my brain did a direct translation. Sorry about the confusion.

Reynold

  • Stubble
  • **
  • Posts: 226
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #16 on: January 26, 2017, 01:45:49 PM »
Effectively moving can be incredibly hard on older people, issues which stretch beyond the logistical issues. In fact it often results in the person moving into assisted care (aka nursing home) far sooner than they should be).

My inlaws faced this; they lived in a house that wasn't really suitable for their decreasing mobility, and looked around for a place all on one level, but (1) a place with comparable square footage that was designed for accessibility (wider doorways, all on one level, etc.) in the same town was about double what they could sell their house for, and (2) they just couldn't face the mental and physical stress of moving.  The agreement to have the real estate agent show them around was longer and more complex than the whole set of paperwork they did to buy their house in the 1950s. 

I can understand, the last time we moved, even paying movers to move us it was still weeks getting unpacked in the new place.  We spent 2 solid days just on the books (10 full sized bookcases, we like to read, sue us :)   By that point, in their 80s, my inlaws needed a couple of days just to pack and prep for a weekend trip. 

We have already changed from a single family home to a townhouse on our last move to reduce maintenance and such, and are actively weeding possessions out.  That also saves us ~$6k/year on property taxes in our new area, versus a house.  Next move may be to a condo, in a walkable area.  I don't see us renting, because my DW is terrified that if we put a nail in the wall to hang a picture or spill something on the floor we would lose our security deposit and get kicked out and have to live under a bridge in a cardboard box.  That is not strictly a financial consideration, though. :)

I see the rent versus buy for retirement decision hinging a lot on how desirable an area is to live in.  In upstate New York, for example, you could probably rent forever and it would stay cheap.  In CA, or Denver, or Seattle, or other desirable areas for people to move to, I could see rent and home prices increasing faster than inflation, and being a problem for long term planning as a renter since you can't lock costs in for a decade or more.  There are definitely places in the U.S. that you can either long term rent or buy, though, if you want to live in an active senior community; we are hoping for something more mixed. 

Hadilly

  • Stubble
  • **
  • Posts: 202
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #17 on: January 26, 2017, 02:14:30 PM »
Our downstairs neighbors in our apartment building moved in because they had been thrown out of their home of 40 years when their landlord died. It's a HCOL and the heirs were sitting on a goldmine essentially. They left neighbors, swim club, etc. to move to the next town over and a cheapish apartment. They kind of lucked out, we are all nice people and the rent wasn't too high, though it got raised after we left, but it also sucked that they hadn't locked in their housing decades earlier.


alsoknownasDean

  • Handlebar Stache
  • *****
  • Posts: 1601
  • Age: 33
  • Location: Melbourne, Australia
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #18 on: January 27, 2017, 12:37:11 AM »
I live in Australia in a city where housing prices are insane (2nd most expensive city in the world actually). While I'd love this housing bubble boom to end, there's a chance it could continue forever or alternatively fail to crash fall to an extent at which prices become reasonable.

Do you have to live there? Can you move somewhere more affordable in FIRE?

I know locally the main reason people can't/don't move to LCOL areas is the need to work/earn money. FIRE eliminates that so many great LCOL areas are feasible.
Yeah there's plenty of lower COL areas in Australia. Not being overly concerned about finding specific employment would open up lots of regional centres and the smaller capitals. Some might even be a reasonable train/plane trip away if you plan to regularly return.

Yeah the issue with renting in one's old age is whether rent increases stay steady with income. If your income increasea by 4% and your rent by 4%, sure, but if the rent increases by 10% each year?

Eric

  • Magnum Stache
  • ******
  • Posts: 3623
  • Location: On my bike
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #19 on: January 27, 2017, 12:01:21 PM »
Yeah the issue with renting in one's old age is whether rent increases stay steady with income. If your income increasea by 4% and your rent by 4%, sure, but if the rent increases by 10% each year?

Do you think that would be sustainable?  I rent in one of the hottest rental markets in the US right now (silicon valley) and even here any landlord increasing rent by that much wouldn't be able to keep tennants for long and would end up with a lot of vacancies.
"Compound interest is the most powerful force in the universe."  -- Einstein

trollwithamustache

  • Bristles
  • ***
  • Posts: 271
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #20 on: January 27, 2017, 12:29:51 PM »
No one seems to talk about the size of the place you are renting when doing the rent/buy comparison.  A one bedroom apartment is way cheaper than a small house in any market I've ever lived it.   If you need the space/have big stuff hobbies, owning the house is very helpful.  The house is really nice with kids. But after a while, do we really need all that space?

Plus when you get older you don't have to maintain the house.

Dicey

  • Walrus Stache
  • *******
  • Posts: 5972
  • Age: 59
  • Location: NorCal
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #21 on: January 31, 2017, 10:23:48 AM »
Yeah the issue with renting in one's old age is whether rent increases stay steady with income. If your income increasea by 4% and your rent by 4%, sure, but if the rent increases by 10% each year?

Do you think that would be sustainable?  I rent in one of the hottest rental markets in the US right now (silicon valley) and even here any landlord increasing rent by that much wouldn't be able to keep tennants for long and would end up with a lot of vacancies.
I don't know but down here in the LA/OC metro area rental prices have been rising approx 10% or more every year yet people are still wanting to rent. Most just double up now, even in one bedroom shares, in order to afford places in certain areas rather than do long commutes. For myself, as a lower income ERee, I wouldn't count on rents not outstripping my passive income over a 40 year plus span - at least not here - and I'm not sure at 80 or 90 I want to be dealing with apt hunting and moving.
Amen!
I did it! I have a journal!
A Lot Like This
And hell yes, I am still moving confidently in the direction of my dreams...

travelbug

  • Bristles
  • ***
  • Posts: 261
  • Location: Australia
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #22 on: February 01, 2017, 11:05:24 PM »
Yeah the issue with renting in one's old age is whether rent increases stay steady with income. If your income increasea by 4% and your rent by 4%, sure, but if the rent increases by 10% each year?

Do you think that would be sustainable?  I rent in one of the hottest rental markets in the US right now (silicon valley) and even here any landlord increasing rent by that much wouldn't be able to keep tennants for long and would end up with a lot of vacancies.
I don't know but down here in the LA/OC metro area rental prices have been rising approx 10% or more every year yet people are still wanting to rent. Most just double up now, even in one bedroom shares, in order to afford places in certain areas rather than do long commutes. For myself, as a lower income ERee, I wouldn't count on rents not outstripping my passive income over a 40 year plus span - at least not here - and I'm not sure at 80 or 90 I want to be dealing with apt hunting and moving.

Absolutely! Rent here in Australia is ridiculous. We were looking at houses for my SIL as she moved to our area and there were people outbidding each other on there rental price and a waitlist of at least 5 families/couples per house we looked at. The owners could be very choosy.

We wonder about this question too though, we currently own our home but would like to have the freedom of being able to live in different places in retirement. For us, we will not leave Australia without afoot in the real estate market and will have an investment property that we can sell if we want to buy a base to live in.

frugalfinancehippy

  • 5 O'Clock Shadow
  • *
  • Posts: 18
  • Location: Canada!
    • The Frugal Finance Hippy
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #23 on: February 01, 2017, 11:52:36 PM »
For a while I had the dream of buying the "dream house" and setting down roots etc but in reality it's a lot of work. Hubs and I have both owned places before and found the upkeep and maintenance costs to be so high it negates most of the investment opportunity in the short term at least. Also we're in a HCOL area and will be here for at least the next ten years or so. We're happy in our condo with a little patio for now next to a large park. I find it freeing that we're not tied down to a mortgage at the moment and given our current real estate market around here I feel like it's a stupid time/place to buy (about a million for a regular house in a nice neighbourhood that will need work guaranteed). For a while I felt frustrated that we weren't buying but I just don't know what I'm going to want to do or where I'm going to want to be in ten years. Just because you don't purchase now doesn't mean you can never purchase a home. Renting right now is helping increase our savings dramatically too.

Freedomin5

  • Bristles
  • ***
  • Posts: 395
  • Location: China
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #24 on: February 02, 2017, 12:48:41 AM »
I'm currently renting but do not plan to rent forever. I've been a renter for over 15 years in five different cities. My experience is that there is no sense of stability. The landlord can decide to sell the unit or take it back, and you have no choice but to start looking for a new place. It's better in cities with rent control, but where I am now, prices have been increasing at 20% per year. Rental places tend to be more run down, and you can't make changes to the place to make it more efficient. I'm renting currently because I don't know how much longer I'll be in this city, so I need the flexibility to leave at a moment's notice.

damyst

  • 5 O'Clock Shadow
  • *
  • Posts: 64
  • Location: Canada
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #25 on: February 02, 2017, 02:02:50 AM »
I'm a 40 y.o. renter, and I've been exploring this question too. My family lives in another of those ridiculously priced housing markets, and buying even a condo here would set back our FI goal by several years.

There are two "seminal" blog posts I really like about renting vs. buying: one by GCC and the other by Financial Samurai. You should absolutely read both. Unfortunately, they reach opposite conclusions, which shows that the question is legitimately difficult even for the most savvy analysts out there.

Here (on page 1) is a historical chart of Australian home price growth. It shows that housing is indeed rising faster than inflation, but not by much - roughly 3 percent in real terms.
Given this outcome, and considering the cost of home ownership (maintenance, taxes, extra work, ...), your equity is clearly better off in the stock market than in home ownership over the long term, and if you don't live beyond your means you'll have no problem buying into the market sometime in the future.
You can see there's a lot of volatility though. Naturally, any period where house prices are rising rapidly will make real estate investors giddy and renters anxious.

The story for homeowners / real property investors in the U.S. is even more grim. On average, they are not beating inflation.

If I have to make a long-term prediction regarding where housing prices will go, My bet would be on the average outcome - not on the recent trend in places like Sydney. That is, I'm siding with GCC's conclusion over Financial Samurai's. Therefore, the plan is to continue renting and increasing our stash. When we reach an age where we value stability over flexibility, we should be able to find an attractive location to buy into.

marty998

  • Magnum Stache
  • ******
  • Posts: 4802
  • Location: Sydney, Oz
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #26 on: February 02, 2017, 04:29:15 AM »
OP - please be my tenant? I'm planning on keeping my apartment IP forever if I can.

MrsPete

  • Magnum Stache
  • ******
  • Posts: 3337
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #27 on: February 04, 2017, 05:57:23 PM »
Thinking about an elderly person living in my daughter's apartment vs. my house ... the house wins: 

- I have my own parking spot right outside my door.  If I need, I can install a ramp.
- I have a walk-in shower, whereas her apartment has only a standard tub -- not so easy for an elderly person to enter/exit.
- I have a large pantry so if I ever stop driving, I have the ability to stock up on necessities.
- My mail is delivered to the end of my driveway, whereas she walks halfway across the apartment complex to retrieve hers.
- She's paying for a pool and a work-out room in her apartment complex -- not something an elderly person would use.
- She lives in a second floor apartment and has mentioned that she would hate to live in a first-floor apartment because those people have to keep their blinds closed and because cars shine their lights right into their rooms ... yet an elderly person would essentially have to live in a first floor apartment.
- She has to carry her laundry to the next building to use the washer/dryer; not something that'd be easy for an elderly person.
- And something that matters at any age:  Her apartment is made up of builder-basic stuff.  She has thin, cheap carpet, ratty old cabinets, etc.  I don't particularly desire the best of the best, but I do like having my walls painted the way I want, energy efficient windows, tile of my choice in my bathrooms, etc. 

cchrissyy

  • Bristles
  • ***
  • Posts: 412
  • Location: SF Bay Area
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #28 on: February 04, 2017, 07:42:55 PM »
But I also think the "having to move" concern is way overblown.  There's basically nothing a landlord wants more than a tenant who is stable, pays their rent on time, and isn't throwing large parties or disturbing the whole neighborhood.  Elderly people with money are basically the perfect tenants. 

completely agree

I am a longtime renter and have only ever moved when I wanted to, and never ran into the dreaded situation of preferring to stay somewhere but being kicked out due to sale or the landlord wanting to move in.

I'm also a landlord and wouldn't dream of selling a house that had a stable rent-paying non-disruptive tenant in place.

Hargrove

  • Bristles
  • ***
  • Posts: 498
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #29 on: February 05, 2017, 09:34:08 AM »
Hey there everyone,

I've done the calculations on the capital needed to own a house, and the capital needed to forever pay rent (based on a 4% rule). The difference between the two amounts are ridiculous - pursuing ownership would require me to work many extra years.

Or those that have chosen the "renting life" and are a big younger, have you considered these issues?

I think your assumption that you won't be adventurous in older life is unnecessary! I tend to think I'm more in charge of that sort of thing for myself, but you know you better than I do.

There are some places where renting is insane, or buying is insane. I don't really understand how real estate can be so crazy you can't buy a place, though, and also expect rent will not eventually skyrocket as well.

As far as aging goes, the happy medium is condos. I don't know if you have typical HoA fees there, but they're normal in the US, and not only do they take the "house maintenance" piece off your retirement, but they won't inflate nearly so much as rent.

Cassie

  • Magnum Stache
  • ******
  • Posts: 3734
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #30 on: February 05, 2017, 06:58:44 PM »
AT 64 my parents moved into an apartment. My Dad was ill and they had to hire everything on the house done. The really nice 2 bedroom apartment cost the same as their property taxes, upkeep, etc.  Over the course of the next almost 30 years they lived in 3 places. As my Mom aged I would fly home to pack and unpack her and we had movers take her stuff. She felt safer in a security locked apartment too.

ReP

  • 5 O'Clock Shadow
  • *
  • Posts: 38
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #31 on: February 08, 2017, 08:24:53 PM »
We are in this exact boat right now. We live in the Seattle, specifically a suburb near Microsoft which is just insane. We've debated rent versus buy which is obviously a whole different subject - but this is our exact question too. It's hard to imagine it down the road. We worry about keeping our kids in the same schools if we have to room. On the other hand, we feel safe in the rental we have (we even asked our landlord to sell but they said no - so hopefully that means we can hunker down here).

Lots of good anecdotes here but I have yet to find a good explanation discussing the financial nuts and bolts of renting "forever". (I am so not an economist). We will get raises with inflation, so as rent markets increase our incomes will track (overall). But what about when we're retired? I feel like I can barely even articulate this question which says a lot about my confusion ;)

Eric

  • Magnum Stache
  • ******
  • Posts: 3623
  • Location: On my bike
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #32 on: February 08, 2017, 08:40:33 PM »
Thinking about an elderly person living in my daughter's apartment vs. my house ... the house wins: 

- I have my own parking spot right outside my door.  If I need, I can install a ramp.
- I have a walk-in shower, whereas her apartment has only a standard tub -- not so easy for an elderly person to enter/exit.
- I have a large pantry so if I ever stop driving, I have the ability to stock up on necessities.
- My mail is delivered to the end of my driveway, whereas she walks halfway across the apartment complex to retrieve hers.
- She's paying for a pool and a work-out room in her apartment complex -- not something an elderly person would use.
- She lives in a second floor apartment and has mentioned that she would hate to live in a first-floor apartment because those people have to keep their blinds closed and because cars shine their lights right into their rooms ... yet an elderly person would essentially have to live in a first floor apartment.
- She has to carry her laundry to the next building to use the washer/dryer; not something that'd be easy for an elderly person.
- And something that matters at any age:  Her apartment is made up of builder-basic stuff.  She has thin, cheap carpet, ratty old cabinets, etc.  I don't particularly desire the best of the best, but I do like having my walls painted the way I want, energy efficient windows, tile of my choice in my bathrooms, etc.

You know you can rent a house, right?  Or an apartment that's not in a complex?  Most all of your issues are with one specific apartment set up, ignoring the fact that there are as many types of places to rent as there are to buy.
"Compound interest is the most powerful force in the universe."  -- Einstein

damyst

  • 5 O'Clock Shadow
  • *
  • Posts: 64
  • Location: Canada
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #33 on: February 08, 2017, 09:49:44 PM »
Lots of good anecdotes here but I have yet to find a good explanation discussing the financial nuts and bolts of renting "forever". (I am so not an economist).

The point I was trying to make earlier is that at no time in life would you have to commit to renting "forever". Financially responsible renters are better positioned than the average homeowner to build wealth, which you can use later in life to buy your principal residence if you become disenchanted with renting.

Quote
We will get raises with inflation, so as rent markets increase our incomes will track (overall). But what about when we're retired?

Your stash of savings will continue to grow, and fast enough to keep up with inflation. That's the core of FIRE theory. In fact, your stash receives "raises" faster than your work begets you, as Thomas Piketty famously showed.

MrsPete

  • Magnum Stache
  • ******
  • Posts: 3337
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #34 on: February 11, 2017, 07:32:16 AM »
Thinking about an elderly person living in my daughter's apartment vs. my house ... the house wins: 

- I have my own parking spot right outside my door.  If I need, I can install a ramp.
- I have a walk-in shower, whereas her apartment has only a standard tub -- not so easy for an elderly person to enter/exit.
- I have a large pantry so if I ever stop driving, I have the ability to stock up on necessities.
- My mail is delivered to the end of my driveway, whereas she walks halfway across the apartment complex to retrieve hers.
- She's paying for a pool and a work-out room in her apartment complex -- not something an elderly person would use.
- She lives in a second floor apartment and has mentioned that she would hate to live in a first-floor apartment because those people have to keep their blinds closed and because cars shine their lights right into their rooms ... yet an elderly person would essentially have to live in a first floor apartment.
- She has to carry her laundry to the next building to use the washer/dryer; not something that'd be easy for an elderly person.
- And something that matters at any age:  Her apartment is made up of builder-basic stuff.  She has thin, cheap carpet, ratty old cabinets, etc.  I don't particularly desire the best of the best, but I do like having my walls painted the way I want, energy efficient windows, tile of my choice in my bathrooms, etc.

You know you can rent a house, right?  Or an apartment that's not in a complex?  Most all of your issues are with one specific apartment set up, ignoring the fact that there are as many types of places to rent as there are to buy.
Yes, you can rent a house, but they aren't as plentiful as apartment rentals and tend to cost as much as buying.
Yes, apartments not in a complex exist (my mom has one on the side of her house), but they're pretty rare. 
Yes, I discussed one apartment as an example, but it is representative of the vast majority of apartments out there. 
Perhaps it varies elsewhere, but in my area renters' options are limited. 

urbanista

  • Stubble
  • **
  • Posts: 210
  • Location: Australia
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #35 on: February 14, 2017, 02:42:15 PM »
Don't forget that everything in Australia is biased towards home ownership. Age pension, council rates discounts for low income people, no tax on PPOR capital gains.

Dropbear

  • 5 O'Clock Shadow
  • *
  • Posts: 51
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #36 on: March 21, 2017, 06:13:53 AM »
I'm an Aussie in the same rental boat as you.

My own research of the rent v buy proposition led me to these conclusions:
- Buying is too expensive to justify right now
- Renting for the foreseeable future is financially sound
- Renting comes with the flexibility advantage of being free to move
- Sharing a rental in the inner city is a good mustachian investment in one's own time and active locomotion capacity*

*but it comes with the proviso of finding both a good place to live and a good person to live with in the same reasonably priced package.

While I've found a great apartment with a great flatmate, I hate the idea that I could be asked to move out a month's notice.

Long term options include continuing renting, buying, or a range of other interesting affordable housing alternatives I hope become mainstream, such as baugruppen and nightingale.

mara

  • Stubble
  • **
  • Posts: 175
  • Age of enlightenment
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #37 on: March 21, 2017, 09:25:24 AM »
I'm a 40 y.o. renter, and I've been exploring this question too. My family lives in another of those ridiculously priced housing markets, and buying even a condo here would set back our FI goal by several years.

There are two "seminal" blog posts I really like about renting vs. buying: one by GCC and the other by Financial Samurai. You should absolutely read both. Unfortunately, they reach opposite conclusions, which shows that the question is legitimately difficult even for the most savvy analysts out there.


I agree that both options can work well. Take health and interests into consideration. Staying active increases options. My parents chose renting for their later years, for less work, more travel, and more flexibility. I love my little 1,200 sq. ft. house and might want to stay forever.

DH and I think "downsizing in place" is a good idea for having more and easier options. We've been decluttering and donating for more than two years, always having a box or two on the porch for the next donation pickup. It's so much easier to find things now!


Cassie

  • Magnum Stache
  • ******
  • Posts: 3734
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #38 on: March 21, 2017, 01:49:18 PM »
My Mom could not handle packing up their entire apartment in her late 70's. My dad was severely disabled at age 59 from a major stroke.  However, I had 2 sibs that lived much closer but did not come to help so each time she moved I had to fly across the country and use my 2 week vacation to pack and unpack them.  Fortunately, she only had to move a few times. One time she was in a nice complex but there was a leak in another apartment and mold started to grow in hers and the landlord refused to do anything. She even had mold in the refrigerator and freezer. So no choice but to move.  If we ever decide we don't want our house I see us buying a condo instead of renting but mainly because I like to paint, etc the way I want. 

happy

  • Magnum Stache
  • ******
  • Posts: 3482
  • Location: NSW Australia
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #39 on: March 25, 2017, 05:02:43 PM »
Also working in health, I agree with OP that moving when you are elderly, say 80 (not 65!) is inordinately distressing/devastating etc.

My thoughts are:

1. If you retire young and don't inflate your lifestyle, using 4%WR  (or less)and if the past is a guide, then you will likely end up with pots of money and could afford to buy in your old age, whether that be a private dwelling or into a retirement village. Note cost of retirement units/nursing home deposits in Sydney are as outrageous as housing prices.

2. LCOL areas in Australia tend to be small, regional centres  and often lack appropriate services and facilities for the elderly. Particularly health services. 

3. If I had my time over again, I would do what I like to call the BigchrisB method..... whilst young rent, take on the lease and sublet to room mates, so that ones rent is minimal ( or even makes a small profit).  Work the stash big time.  Once you are very comfortably FI, carefully consider buying a property if thats what you want, preferably worth  50% or less  than your stash. Take in room mates to help pay the mortgage if you choose to have one.

In summary, yes, I want to end up in my old age say 70 and above with enough capital to buy a place in a large regional centre with sufficient health and other service infrastructure.
Journalling at Happy Aussie Downshifter

Missy B

  • 5 O'Clock Shadow
  • *
  • Posts: 70
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #40 on: April 06, 2017, 12:11:47 AM »
Do they not have movers in Austraila?  With all the money you've saved from not owning, surely you can afford to pay someone to move your stuff if needed.

I guess my concerns are shaped by my social work experiences with older persons.

Moving isn't just about moving your things on the day that your lease ends. It involves house searching, which may be a lot harder if you require a place that accommodates physical disability (like a wheelchair, or somewhere with no stairs, disability aids like handlebars, assistance buttons). It requires you to not only find these places but apply for them, competing against other candidates (which, with an aging population, will probably be quite a few).

You may not be able to secure an appropriate living location in the same area. Particularly with decreased mobility, moving can have devastating social and psychological impacts for older persons. This includes intense loneliness and isolation, loss of confidence etc

This will be compounded, as I expect to happen with increasing age, by the reality that people are far less adventuress when they are older  - just like I enjoy routine and consistency much more at 26 than I did at 18. By the time I get to 65, I doubt I'm going to relish such a substantial change.

Effectively moving can be incredibly hard on older people, issues which stretch beyond the logistical issues. In fact it often results in the person moving into assisted care (aka nursing home) far sooner than they should be).

And Eric you're right, perhaps older renters are less likely to be asked to leave. But it does happen in Australia - enough for it not to be uncommon! Which is probably a reflection of the Australian propert investing culture - most Australians buy property to profit from the capital gains, not the cashflow. So selling investment property is pretty common (or buying it with intention to move into it when the mortgage is more manageable under the nationally strong held belief that Australian property never goes down)

Really good summary of the issues, and I think you're right to be concerned.
I live in the third most expensive city (or, third least affordable is perhaps most correct) and because I didn't buy anything when I could have, I am basically priced out unless i want to carry a massive mortgage on a meh one-bedroom. So I may end up leaving once I'm retired. rents have spiked here recently, a mix of empty investment homes and Air BnB removing long-term supply from the market.
I'm especially aware of how hard being renovicted (its legal to evict tenants if you are renovating) is for seniors, and frankly, senior renters cannot  afford a new place at the higher rents, or even the rent-control of 2% + inflation. A lot of older people here who don't own are going to end up having to leave.

People who rent from private owners rather than a complex/rental apartment are at far more risk of losing their place. Private owners here have sold in large numbers to take profits, and their tenants are out. Committed rental buildings are much safer; if they are sold, normally the tenants stay in place. The stories we hear about renovictions from those kind of buildings are mainly for buildings that had big apartments with really cheap rent. For buildings that are renting closer to market, the risk is a lot lower.

My Mom recently lost her private owner rental of 17 years. He gave them a months notice, (illegal) because his girlfriend wanted their suite. In a private home rental, your situation can change suddenly if something happens with the landlord. Pro apartment rentals are safer.

PeanutUtd

  • 5 O'Clock Shadow
  • *
  • Posts: 17
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #41 on: April 17, 2017, 03:33:23 AM »
We've actually just moved to back to Melbourne after many years overseas. The prices relative to income seem somewhat crazy to us. So we are in a similar position, we found our initial house hunting (to buy) quite overwhelming. Work is close to the central business district, so that's a big part of the challenge. After lots of number crunching, covering a range of future market conditions, we decided that renting made more financial sense for us.  This enables us to optimise other aspects of our life - we don't need a car, can ride the bike to work, no maintenance costs etc. Based on our buy vs rent calcs we think we'll come out ahead if we rent and invest the extra money.

Having said all that, we are also worried about renting later in life. Our current plan is to move to a LCOL (or medium) area once we FIRE. We hope to buy then.

Sustainable Happiness

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #42 on: April 23, 2017, 10:02:23 AM »
Roughly 6 months ago DW and I moved from owning to renting (granted we still own a couple rentals)...The transition has been very freeing and we are looking at selling our rentals as well so we are no longer tied to any property. I've seen a couple posts on rents vs mtg payments on this thread...

The full calculation would need to be more like (and I am sure I missing pieces here)
Rents + utilities if they apply + emotional downside of possible instability - capital gains on unlocked capital - emotional result of housing mobility
vs
Mtg payment + property taxes + home insurance + incidental expenses spread over 12 months per year - emotional upside of ownership and stability - capital gains on house (if you ever friggin' sell and don't buy another house tying up more capital) - interest rate on principal being held in the house

We are growing even more in the camp of freedom to do as the greatest value (hence the quest for FI) and therefore home ownership is bunk, not to mention likely a shittier financial decision (unless that appreciation minus buying and selling costs is really really good).

Unfortunately this is difficult to explain verbally so I often (if the discussion happens) just refer people to the GCC article mentioned above, or the jimcollinsh post and people rarely follow-up on article suggestions we just agree to disagree and move on with our relationship.

Sustainable Happiness

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #43 on: April 23, 2017, 10:11:10 AM »
Also that Financial Samurai post mentioned earlier is missing out on a ton of the additional costs (and opportunity costs) of owning a house and focused only on appreciation and equity build and he's using houses worth massive amounts which would skew absolute growth metrics over % growth metrics. I could also be misunderstanding his chart and misinterpreting a real estate market I know nothing about.

Bracken_Joy

  • Walrus Stache
  • *******
  • Posts: 7017
  • Location: Oregon
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #44 on: April 23, 2017, 10:54:03 AM »
I don't know about Australia, but I know all the cities I've lived here in the pacific northwest of the US have lots of 55+ rental complexes. So you avoid a lot of the apartment downsides- no small children, apartments are set up with mobility restrictions in mind, and they specifically cater to low tenant turnover. So something like that could be an option as you get older.

That being said, consider what "old" is. My father is 72 years old and still hunts/camps/fishes/does home repairs solo. He can climb a ladder onto a roof no problem, etc. Rather than worry about rentals now, I would be MUCH more worried about maintaining health so that you are less likely to have any issues living independently. =) Make sure your diet and exercise habits are in place, keep the amount of crap you own under control, don't smoke, don't drink or do so only moderately, see your doctor often. These are steps you can take that are undeniably beneficial, rather than trying to guess what the market will do.
My journal: Hiding in the Ferns
Like babies? Have kids? Want to chat about Babies and Pregnancy/Infertility? Group Journal Here.

Mr. Rich Moose

  • Pencil Stache
  • ****
  • Posts: 708
  • Location: Alberta
  • "Tuxedo"
    • The Rich Moose | A Better Canadian Finance Blog
Re: Renters for life/foreseeable future - worried about renting in old age?
« Reply #45 on: April 23, 2017, 03:42:07 PM »
I'm more than happy to rent for the rest of my life. My wife and I got into the homeownership game early, bought a fixer-upper, and lived in a house that was way too big for us. Although we find rich as young homeowners, the constant renos and maintenance were killing our savings rates. We sold last year and it was the best thing we did for our finances.

Although we live in a moderately priced city by Canadian standards, my calculations estimate we are ahead by around $400/month and a lot more than that in stress value.

There are a ton of seniors apartments and complexes in Western Canada with competitive rents. I imagine they don't market themselves as frequent evictors of old people so there should be low risk of unwanted moves.
"Moostachian" Blogging Canadian Finance
Smart posts on getting FI faster. Follow my journey with Net Worth updates monthly.
http://www.therichmoose.com

ehzw

  • 5 O'Clock Shadow
  • *
  • Posts: 4
I am planning to rent forever (although I'm happy to reconsider occasionally - in 30s now). My parents own houses and it is so much work! I also like that I can move cities or countries more easily than if I owned, and get a larger house while kids are at living at home. I definitely try to keep my possessions to a minimum. Isn't moving when you reach an age with decreased mobility a plus? :)

Many of the places I have rented have been owned by companies/developers rather than individuals. In this case you can usually stay for a very very long time - even once the building was sold but to another investment firm so nothing really changed. Haha just read that is the complete opposite advice of Eric above, but I agree with Missy B. I have seen individual owners wanting renters to move out so they can "rent" the place to a family member quite a bit.

My grandparents (now in their 90s) moved into a standalone house in an retirement village in NSW about 15 years ago. They are super happy there - lots of community, all the houses are are built for decreased mobility, they can get household help (cleaners, nurses) easily and can move to an actual nursing home in the same community when they need to. They did own before they moved into this place, and they were not keen on the transition before it happened but settled very quickly.

P.S. most of my rentals have been great for older people - an elevator to the road and parking garage, laundry in apartment, someone else to do all the maintenance both inside the apartment and to the rest of the property, a central location where it is easy to get groceries delivered etc

Meadow Lark

  • Magnum Stache
  • ******
  • Posts: 4751
In my job I speak to elderly people all the time who are living in the house they have owned forever, and they would be so much safer in a retirement community or independent living facility or assisted living facility. 

OP, am I correct in understanding you are 26 years old?  I can't predict what I will want 5 years from now, much less 50.  I wouldn't worry about this now.  Make a date with yourself to revisit it when you are 50.  You will no such more than you do now about who you are and what you want.